Nice pun, Myst!
Now, John, every single payment I receive through PayPal tells me who paid it.
If Mystery Researcher pays me $18,000 this year through PayPal, and I receive 2 1099s, each showing $l8,000, by showing my elegant and perfect records, I can conclusively prove that I reported $l8,000 in se income, that $l8,000 was the total income received, that I properly deducted the related expenses, and so on. Times however many MSCs pay me through PP, or any other 3rd party system (they are all under the same reporting requirement, as I understand it).
If you are unable to prove you reported all income, blame poor record-keeping, not the system.
However, John, I freely admit and agree that IRS is understaffed, undertrained, overwhelmed, and extremely error prone. Your worries are justified.
But instead of worrying about something you cannot control, use all that energy to focus on something you CAN control -- your own recordkeeping.
For example, one year, standing in the line at the post office at quarter of five on the last legal day to mail my paper returns, I got a weird feeling, and mailed my return priority mail, return receipt requested. It was about 3 months before the little green card came back. I stapled it to the receipt for the Priority Mail, which was stapled to my copy of my return. My return sat in IRS's mailbox over 6 weeks before an employee signed for it and picked it up. So they didn't even look at my return until after I was expecting my refund!
I sent a letter. About 6 months later, I got an answer -- I hadn't filed my return timely, therefore they kept my refund (in excess of $2,000) and I would not be receiving it. I copied that letter, my Priority Mail receipt, the little green card that showed the date it was actually picked up at the post office, and wrote a scathing reply that "here's my proof -- yes, it was the last legal day to file timely, but I did, and here's the proof". About a year later I got my refund, plus interest.
Record keeping, John, record keeping!
(And, BTW, that is the ONLY time I felt compelled to use Priority Mail for my tax returns. Weird, huh? )
Edited 1 time(s). Last edit at 07/15/2022 08:44AM by ceasesmith.